ᐅ Buy an older property to rent out?

Hello,

after receiving such great help here in the forum regarding my question about cancellation periods, I’m coming back with another situation.
Maybe there are experts here who can help me make a decision on this topic as well.

Here’s the deal:
On our neighboring property, there is an old house, estimated to have been built around 1900, with a thatched roof, and the plot is about 800 square meters (8600 square feet).
The house belongs to my mother-in-law.
Currently, there are two rental units in the house; one is vacant at the moment, and the other is rented out.

Now the property is up for sale because the money is needed.

The construction company said that renovating for personal use is not worthwhile; demolition and rebuilding would be cheaper.
A real estate agent apparently came to appraise the property—I’m not entirely sure, but he suggested they might get around €160,000 (about $175,000) for it.
Although the bank is only considering €120,000 (about $130,000).

I know it’s hard to assess much from a distance and with limited information, but we are facing the decision whether to buy the house and then continue renting out the apartments.
The problem is that the entire building is quite old, and it seems inevitable that some renovations will be necessary over time.

Would you go for it?
Interest rates are extremely low right now, so the time for buying would be favorable.
Is it realistic to cover the entire financing through the rental income, or is that too risky?

We don’t want to put much equity in, so the plan would be to fully finance it and then effectively pay off the loan through the rental income...

You’re probably going to tell me right away to stay away from it...
But I would still appreciate any opinions.

Regards,
Egon

The real estate agent can say a lot. You need a proper appraisal of the value. You need an income value based on the expected rental income and you need a renovation cost estimate from a company that would carry out the renovation, as well as a quote from a property management company. Then you compare expenses and income, and if it pays off after, for example, 20 years, you invest; otherwise, you don’t. I don’t quite understand the question.

SuperEgon schrieb:

Interest rates are currently extremely low, so now is a favorable time to buy.

And precisely because interest rates are low, property prices have increased, and renovation companies are making a fortune.

But if your construction company already suggests demolishing the ruin...

I don’t know the condition of the building or why it’s half empty, but there are also experienced landlords who do minimal or no maintenance on their properties.

Mottenhausen described it well: calculate carefully and factor in the risks.

What is the value of the 800m2 (8600 sq ft) plot of land?

SuperEgon schrieb:

Hello,

After receiving such great help here in the forum regarding my question about notice periods, I’m coming back with another situation.
Maybe there are experts on this topic who can help me decide.

Here’s the situation:
On the neighboring property, there is an old house, estimated to have been built around 1900, with a thatched roof, on a plot of about 800 sqm (8600 sq ft).
The house belongs to my mother-in-law.
Currently, there are two rental apartments in the house, one is vacant, and the other is rented out.

Now the property is going to be sold because the money is needed.

The construction company said that renovating for personal use isn’t worth it, and that demolition and rebuilding would be cheaper.
A real estate agent apparently assessed the property; I’m not completely sure, but they said it might fetch about €160,000 (approximately $170,000).
However, the bank is apparently only willing to lend against a value of €120,000 (about $130,000).

I know it’s hard to give good advice from a distance and with such limited information, but for us the question is whether to buy the house and continue renting out the apartments.
The problem is that the whole property is quite old, and it’s likely that some renovations won’t be avoidable over time.

Is it a good idea to proceed?
Interest rates are extremely low right now, so the timing for a purchase seems favorable.
Is it possible to fully cover the financing through the rental income, or is that too risky?

We don’t want to invest much equity—so we’d finance everything and then pay off the loan practically through the rent income...

You’ll probably tell me right away to stay away from it...
But I’d still appreciate any opinions.

Regards,
Egon

And if the ceiling falls down, you’re liable in court. Not every run-down place is worth anything.

The plot price is generally around 80-100 €/m² (9.3-11.6 $/ft²), as is typical for the area.
I don't know the exact amount at the moment.